The Cure For Malaise across All British Housing Markets

The cure for malaise across British housing markets is to use a combination of two cures, in a similar way to a doctor using two specific antibiotics to cure a pernicious illness or disease.

The expertise required to achieve such a thing involves first acquiring a deep and accurate knowledge of the causes and then following this, the ability to diagnose the correct treatment to cure the specific illness.

It is of course imperative to be able understand precisely how and why a specific malaise has occurred. Only then can the correct cure be identified and prescribed.

Peter Hendry says, “I can explain in simple terms why house prices are continuing to rise despite the increasing lack of affordability affecting ever more prospective buyers.”

In a nutshell, the housing market should find the values of houses in a quite specific way.

The true value (or the correct buy price), of any specific house being offered for sale in any (local) housing market should be arrived at by adding THREE separately-assessed components together:

1 The land value – which depends in part upon location.

2: The construction cost (including a profit element to the builder or developer).

3: A further amount of equity or profit, produced as a result of having combined the two.

These are the things that a sensible buyer should theoretically be considering, even if only subliminally.

All too often however, anxious buyers will base their offers on a combination of how much they could possibly afford and borrow, together with knowing the current asking price being quoted.

What makes this task particularly difficult to quantify is that house prices in today’s housing marketplaces are not derived in perfect market conditions at all. The reason for this is because in a perfect marketplace, the whole amount of homes on the market would be sold out and also, all demand for these would be fully and continually satisfied.

Instead, in the present day housing markets, there are large overruns where either there is too much property being offered at any one time or alternatively, there are too few properties being offered for purchase. Bothe extremes are most uncomfortable for all those trading houses in the regional marketplaces.

Unfortunately, current day estate agency does not assess house prices in the way described just now. Instead they peg asking prices at the level they might simply guess they could sell a house for but also they may well often include what their client (the seller) might hope to to achieve when selling!

Worse, they base their asking prices on what other asking prices are, including what other recent sales will have achieved albeit, for the reasons set out, these would have used skewed or imperfect marketing comparisons for the reasons just set out.

To justify what is being explained here, a year ago for example, a typical estate agent had 37 properties available and 379 buyers (according to statistics published by the NAEA). Today, after a spirited first half of the year after COVID has started to reduce, a typical estate agent apparently has just 23 live listings and over 400 applicants on their register, published from the same source.

If such knowledge was to be broadcast widely, it would skew prices-levels downwards whilst the market is flush with properties for sale, or alternatively, it would skew prices-levels upwards when there are not enough houses coming onto the market – as now.

In the former case, sadly there is inherent pressure within estate agency to want to hide the true facts of an excess of properties being listed for sale compared with buyers so as not to spook the market and keep things going as smoothly as possible, rather than face the reality of a downwards-changing market with prices dipping.

In the latter case however, with too few properties on their books and too many buyers wanting them, broadcasting the lack of supply actually helps agents to justify trying for rising prices even against general economic trends! This is more recently what’s been going on of course.

Selling agents may say that it is the desperation of buyers which is forcing the prices up but that does explain the suggestion that the housing markets are operating at low efficiency. They exhibit imperfections, resulting in a lack of stability and so these markets are in need of an introduction of completely new ways to buy and sell houses.

In my analysis and diagnosis, following understanding the true causes of these problems, two specific ways to deal with them have emerged.

A: Firstly a restriction on the right to occupy a proportion of houses in each locality such as permanent “Primary Residence” status should be placed on these. This would mean these would be for use only by local people, such as key workers for example.

Most people seem to agree that each locality absolutely needs housing to be affordable to those fulfilling the essential roles in their community. This should therefore be enshrined in each area’s local planning rules.

Secondly and very importantly:

B: The emphasis on all prices should be changed so that these are set by ‘buyer offers’ rather than seller price-rigging, which is of course not an open market practice if this is carefully scrutinised.

This is where The House Price Virtuoso Solution (formerly described as The Hendry Solution) could come in. It allows for both of the essential changes cited above.

It would do this by re-shaping house sales by better utilising “Primary Residence” restrictions on certain properties.

AND

It would enable buyers to be free to participate by establishing the price levels themselves, still subject of course to “Primary Residence” restrictions, which would be separately and locally established using local planning rules.

To read more about how The House Price Virtuoso Solution (formerly The Hendry Solution) could improve the way in which houses are bought and sold across all local housing markets in the whole country, please click the following link.

The House Price Virtuoso Solution

How to Improve Housing Markets in England and Wales.

Posted by: Peter Hendry, Housing Valuation Consultant

Author:– The House Price Virtuoso Solution

Buyers need far better representation in the British housing markets

With estate agents acting primarily for sellers and land owners, buyers get poor advice or representation all too often.
Even though they are the ones raising (and usually borrowing) the money for each transaction, they are often the last ones to be told how things are progressing, especially where chains of other sales are involved. A lot of patching up of interlinking chains is frequently going on behind the scenes, which is not necessarily to the advantage of unsuspecting buyers further down the chain. Sale prices at the lower end may require to be re-evaluated.

This is inefficient and ought to be changed otherwise the different local housing markets across England and Wales cannot begin to function more like perfect marketplaces as they should do.

All this happens because estate agents are primarily motivated to try and obtain the best price they can for whatever asset it is they are selling, since they are contracted to act on behalf of the seller. The buyer is often the last person to be told when bids in competition with their own are are being negotiated by the selling agent and then the only remedy remaining for them is to have to find more cash to increase their offer!  It operates rather like a sort of clandestine bidding war usually conducted over a telephone.

House prices as a result, are now passing all time highs but also, they are increasing beyond average couples’ annual earning capabilities for maximum borrowing requirements. This is a big problem especially where earnings are falling. It’s vital that a more generally acceptable approach is available to everyone embarking on house moves, especially if they are first-time purchasers. Purchaser mobility ought to be what should be improved.

The only way this could be done would be to change the way residential property is sold by having agents acting for buyers instead of only acting for sellers.

It is clear that existing estate agents are understandably likely to be reluctant to consider such a change for as long as they can continue to control sales progress in the way they have done essentially since the 1920s.

It would require the buying public to start complaining about the anomalies they are having to contend with when using agents, as well as to prevail upon government to make the necessary improvements to bring about fairer but competitive pricing processes across all residential property markets. Only then could house prices track buyer purchasing power in the localities in which each particular property is located.
The correct solution to this problem does need further in-depth explanation in order for the concept to be fully understood.

For a fully reasoned explanation about this, explaining exactly how such improvements might be achieved please go to:

The House Price Virtuoso Solution (otherwise known as The Hendry Solution)

The House Price Virtuoso Solution

Full details of my proposals for properly reforming the UK housing market.

Posted by: Peter Hendry, Housing Valuation Consultant
Author:– The House Price Virtuoso Solution

Simply building more houses can’t solve the housing crisis

Obviously we need to get more houses built, both for rent and to buy but developing this as a strategy for calming the housing market is not going to remedy the prices uplift which we have recently experienced. It cannot do that simply because building more can’t achieve anything for as long as the considerable time it would take to actually complete the building of the extra housing required.

The market itself is in need of intervention and this does require the involvement of government. A government that can put effective policies into practice faster than the simple but over-quoted ‘build more’ idea.

My solution is to overhaul the way in which houses are marketed, both for sale and to let by changing the way agents themselves operate.

A more market friendly method is required so that house prices can be attuned more towards peoples ability to pay, with less of the speculative pricing by agents, whom currently act only for the vendor legally. It is this which requires urgent attention.

A more transparent housing market would not only take the froth out of asking prices but would have the added effect of calming rent levels too. For more information please go to the link below:

My proposal for the way housing in England and Wales should be marketed, is based on changing from vendor-centric estate agencies to buyer-oriented ones as described in The House Price Virtuoso Solution. This would not cost much to implement and would bring massive benefits to all local marketplaces.

To read more about The House Price Virtuoso Solution go to the following link:

The House Price Virtuoso Solution (otherwise known as The Hendry Solution)

The House Price Virtuoso Solution

How to Improve the Housing Markets in England and Wales.

Posted by: Peter Hendry, Housing Valuation Consultant
Author:– The House Price Virtuoso Solution